Friday, January 25, 2008

Pelosi and Bush push bogus economic "recovery" plan


U.S. taxpayers would get checks of several hundred dollars from the federal government under a plan to stimulate the economy, congressional and Bush administration officials said Thursday.

Great...a lot of leaders, leading us into more bad policy...

"Tens of millions Americans will have a check in the mail," House Speaker Nancy Pelosi, D-California, said at a Capitol Hill news conference. "It is there to strengthen the middle class, to create jobs and to turn this economy around."

Actually, Nancy, it's there because of ignorance about economics &/or crass political motives.

Also, Nancy, you're presuming that the economy needs to be turned around-- and that the government can do so in this context. As the old joke goes, economists have predicted 9 of the last 5 recessions. And the likelihood that this prescription would come soon enough to have any impact is doubtful-- even it is "effective".

What can we guarantee here? If the economy doesn't go into a recession, Congress and the President will take credit for waving their hands at the same time the economy happens to "recover". If the economy goes into a recession despite these efforts, they will say that it wasn't enough and will try to blame it on the other party.

House Minority Leader John Boehner, R-Ohio, said, "I'm looking for quick action in the House. I hope that the Senate will follow quickly so that we can put this money in the hands of middle-income Americans as soon as possible."...

Checks could be in taxpayer mailboxes by June, according to an Associated Press report...

John, you can keep "looking for quick action". But it's unlikely to be quick enough. From Econ 101, we know that policymakers face three lags: recognition (even if we're paying close attention, the data won't reveal a recession until we're well into it), implementation (here, the government must pass a plan), and effectiveness (when will the plan have all of its significant impact-- in this case, when the first checks won't be mailed until June?)

Speaking a few minutes later at the White House, President Bush said the package will "boost our economy and encourage job creation."...

George, what stimulates the economy is incentives to engage in productive behavior-- i.e., cuts in marginal tax rates.

Pelosi said as many as 116 million American families will get a rebate check.

Wow, that's a lot of voters! They're trying to buy our votes with debt. Very impressive!

To get to the agreement, Democrats dropped calls for increases in food stamps and an extension of unemployment compensation. Republicans agreed to allow people who pay Social Security taxes but not income taxes to get the checks, sources said.

There is a nice nugget here: extension of tax credits to those who pay payroll taxes, instead of only those who pay income taxes.'s good to see the Democrats finally pay attention-- and the Republicans accede-- to the tax on income that causes so much damage to the working poor and the middle class!!!

"This package has the right set of policies and is the right size," Bush said Thursday...He added, "This package recognizes that lowering taxes is a powerful and efficient way to help consumers and businesses."

Really, the right set, the right size and the right timing? And he knows this with certainty? Very impressive....or not. And powerful? Yes. Efficient? No...

The stimulus package may face resistance from fiscal conservatives in both parties over worries that it would increase the federal debt. Auditors report that the federal deficit -- the difference between what the government takes in and what it spends -- is increasing.

Correct, but how many fiscal conservatives are there in Congress-- a dozen or two? There are some faux fiscal conservatives-- the Blue Dog Democrats-- who will try to limit deficits but not spending, with their reference to PAYGO rules and the like.

Assuming Baron Hill votes against such a package, he'll have the right vote for the wrong reason. And I'm betting that Mike Sodrel will try to attack him on this as voting against a tax decrease-- thus, supporting the wrong policy for the wrong reasons. Hopefully, Mike will prove me wrong on this one.


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